Poor corporate governance allows economic crises and large business losses

Many experts rightly point out that one of the main causes of the economic crisis is the lack of corporate governance. But the solutions they advocate are stronger government regulation and stricter reporting requirements. Corporate regulation is not corporate governance.

How much more will corporations spend conforming to corporate regulations, before we realize that the whole approach to corporate governance is wrong? Today corporations measure and report contrived overlaid structures, rather than the actual business. Corporations govern by enforcing policies and rules, instead of governing approved business strategies and plans. Corporations and authorities address the symptoms of the corporate governance problem from the governance side with more rules and regulations, instead of solving the problem from the corporate side, by organizing and managing the business. We are now repeating the same past mistakes in response to the current economic crisis.

Good Corporate Governance manages the transition of the current business to the approved strategic business

Corporate governance is internal so that the corporate management has the capabilities to ensure continuation of a strong and ethical corporate business that is planned and managed to create strategic result value, maintain and manage capital worth, and control on-going performance costs. Rule No. 6 of 21^st century business management: Plan and govern the transition from today’s value to approved strategic value. Business management eliminates contrived 20^th century structures that cause our corporate governance problems and, instead, organizes the business itself as one integrated structure for 21^st century business management and governance. The future business is planned and approved in the strategic business structure to plan the value of strategic results and the result research, capital solution development, and strategic value creation needed. Result goals are set and managed time period by period to the strategic business. [more...]

Business information is inconsistent, incomplete, and inaccurate in today's enterprise

Enterprises have much to gain by properly organizing and leveraging information to provide value. Information is not managed properly for support and utilization in today’s enterprise. The business is not organized and managed to capture information produced directly by the business and to apply information directly to the business. The categories of information are not supported as information capital to produce business results. There are no precisely-defined data entities to integrate information from the various systems into a business information base for consistent management information. Most direct business data is never captured, management information is reported in conflicting and inaccurate sets, and actual business management information remains unknown.

The information complexity and accuracy problems are addressed by additional information technology investments

Each management structure and information system defines the enterprise differently producing the information complexity and accuracy problem. Large information technology investments for data reconciliation, enterprise information management, IT architectures, specialized knowledge and records management, etc produce excessive enterprise overheads and never solve the problems.

The managed business integrates actual data, knowledge, records, and intelligence in one Business Information Base

The only solution is to manage the business directly to capture actual business data and produce information capital solutions needed to manage the business directly. Business management provides the proper support for information capital to provide information solutions, to utilize solutions to capture data and apply information directly for the business, and to integrate information on the business in one consistent and accurate Business Information Base for transparent management and good corporate governance. [more...]

Rule No. 1 of the 10 rules of 21^st century business management: Organize and manage the business

The conventional definition of the enterprise business is the activity of providing goods and services. The 20^th century enterprise has never organized or managed the activity of providing goods and services, but, instead, lays rigid enterprise organization and management structures over the business. Business change conflicts with the rigid structures, creating unsolvable problems that can only be eliminated by organizing the business for 21^st century business management.

Eliminate unsolvable problems by organizing and managing one integrated business structure

The business must be organized as one structure to integrate enterprise business organization and management. Business activity is organized as capital solutions utilized in performance. Goods and services are organized as the results produced by business activity. Business results and capital solutions are organized together into a business structure. The business is organized by deploying specific capital solutions to performance domains to utilize in performance to produce specific results. The one integrated business structure is utilized for all 21^st century management planning, directing, control, and reporting to leave 20^th century organization and management problems behind. [more...]

Governments and corporations are looking for a unifying structure for best business market, financial, and economic management

Over the past year, governments have been meeting to construct an international response to the economic crisis. They discussed new best business management practices to solve problems that caused the crisis, and new structures for the financial system and economic management to prevent future crises. Again, as always in the past, they failed to comprehend and address the unsolvable 20^th century enterprise management problems that cause the crisis. Governments add new practices and regulations on top of existing dead-end 20^th century enterprise structures, and claim to have solved the problem.

In order to make real progress, those involved must set current structures aside and take a completely new look at what comprises a business and how businesses relate to industries, markets, financial systems, and economies.

Business management is the only solution available to eliminate unsolvable problems that caused the crisis

The actual business is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. 20^th century enterprise management structures are replaced by one business structure to eliminate unsolvable problems in unknown capital solution investments in the business, unknown economic output results produced in chains across the business, unknown value of results from the business, unknown costs of performance to produce results, unknown value-added to manage the complete business, unknown performance effectiveness to manage result quality, unknown returns on capital investments from the added value to results, unknown capital worth in future output and disposal result value, and on and on. Business management captures actual business data to manage all corporations, financial institutions, and other enterprises properly and to report on the actual business to regulators.

The business is the only unifying structure to integrate corporation, market, industry, financial, and economic management to prevent future crises

Business management builds up from the business structure to consolidate actual business in structures by corporation, industry, or economic area or sector to consolidate actual business data. Data can be consolidated by market for business input and output results and capital solution utilization. Industries, such as the financial industry, can be managed for the value and quality of results and the utilization of financial and other capital solutions. Economies and markets can be clearly viewed and managed to identify and plan for cycles, to anticipate and plan for surpluses and shortages, to manage interest rates and monetary supply, to plan and manage trade, and take other actions that are prevented by obsolete 20^th century enterprise management today. [more...]

20^th century management does not maintain accurate financial and non-financial records on the actual business

Management needs complete and accurate information on the actual business for good corporate governance and business management. This is not possible with 20^th century management used today, which does not organize or manage the actual business. Records are not kept on the capital investments utilized as capital solutions by the business as a set or on the economic output results produced by the business as a set. Thus, there is no set of complete and accurate records on the business to provide actual business management information. Instead, information is maintained against contrived structures laid over the business, such as organization, planning, budget and account, and reporting structures.

Instead of accounting for the business, a chart of accounts is laid over the business. Accounting maintains a sub-set of enterprise records in financial and statistical accounts. The full cycle of performance costs incurred and result value created is not recorded. Many non-financial records that should be maintained are not considered as accounting responsibility and are never recorded and managed as information capital.

The records management problem is getting serious with the explosion in email, file transfers, and other records created, entering, and leaving the enterprise. The enterprise has no way to reference records to the actual business, to prevent records being lost due to information complexity, and to properly manage records as information capital.

Rule No. 4 for 21^st century business management: Keep financial and non-financial records on full business operations and development

21^st century business management requires accurate financial and non-financial records for the full cycle of business operations, along the chain of results produced by the business, and across the operation-development continuum. Business management maintains financial and non-financial records on the actual business to provide accurate and complete management information. The actual business is recorded so that one consistent set of accurate and complete facility records can be maintained on the business and accurate reports on the full business cycle of cost-effective performance producing value-quality results, the results from supplier-provided input results and through enterprise business results to final customer results, and the investment costs in new capital solutions and the return in new result value are provided. 21^st century business management broadens traditional accounting to professional records management for complete financial and non-financial business records. [more...]

20^th century enterprise management lays strategic structures over the business

20^th century enterprise management contrives structures to define the corporate strategy in corporate plans, maps, investment plans, IT plans, financial plans, and other structures laid over the business. The strategic business is not planned. The overlaid structures do not relate to the actual business and may conflict with structures used to manage the corporation. Strategic value numbers are pulled out of the air. There is no good method to govern the transition from the current corporate status to the strategic objective. Corporate governance cannot govern the actual business, so it governs through compliance with arbitrary rules and regulations.

Rule No. 6 for 21^st century business management: Plan and govern the transition from today’s value to approved strategic value.

The business is “investments in capital as solutions of worth utilized for cost and effectiveness of performance to produce value and quality in results”. The business must be planned to know the economic output results that must be produced for business success and the capital investments in the business that are required to produce the results. The business must be managed to know result value, full performance costs, result value-added, complete capital worth, capital investment returns for all solutions, and other essential business measures that are unknown today. The strategic business structure provides the foundation for planning the results to be produced and capital to be utilized at a 2-5 year strategic horizon. Strategic result value is substantiated in specific period by period result goals requiring growth in value of current results and the value of new results enabled by implementation of capital of worth.

Business goals are planned from the current to strategic business for management and good governance

21^st century business management enables good management and governance of the transition to the strategic business by reporting financial and non-financial status against result goals and performance expectations, updating strategic estimates, providing result evaluations and performance assessments, and providing management information on anticipated opportunities, threats, and developments. Good corporate governance ensures responsible business management and planned progress to the approved strategic business. [more...]

20^th century enterprise management manages the enterprise, not the business

20^th century management used today manages the enterprise by laying organization and management structures over the business. We are familiar with the organization structure that requires periodic reorganization, and management structures in the corporate plans, business processes, information systems, account charts, and reporting structures used every day. These structures record a multitude of data entities and can report mountains of information, but do not record actual business data or report actual business management information.

21^st century business management manages the business to manage the enterprise

21^st century business management organizes and manages the enterprise business as one integrated business structure. The enterprise is managed by managing the business of the enterprise. Business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. 21^st century management manages the three entities that comprise the business: capital investments in the business, business performance in the utilization of the capital, and business results produced by performance. All business data is captured in one structure and one consistent, complete, and accurate set of business management information is reported.

There is only one source of knowledge for 21^st century business management

Result-performance Management (R-pM) provides the concepts and procedures for 21^st century business organization and management. The knowledge to manage any business is provided in the Business Management Toolkit. The toolkit is continually updated and expanded to guide 21^st century business management. [more...]

There is but one natural way to organize and manage a business

You use the one natural way to organize your personal business. You produce results in the things you accomplish. To produce results, you acquire and maintain capital as solutions in your capability, time, tools, equipment, money, plans, instructions, etc. You utilize the capital solutions in your performance to produce a result of value, such as a prepared meal, arrived at a destination, a good time, etc. You manage your business through common sense. You do this instinctively because it is the only way to organize and manage your personal business or any other business.

Your company organizes and manages the company, rather than the business

But on your job, you no longer naturally utilize capital solutions to produce results. Your company does not organize or manage the business. The company lays contrived structures over the business to manage the company. All business schools, management books, packaged solutions, consulting advice, professional bodies, and on-the-job experience teach us to lay contrived structures over the business. You cannot manage or perform using common sense. You must follow various rules, regulations, and procedures to utilize arbitrary processes, systems, accounting, and other structures.

Use your natural method to organize your company business

Result-performance Management (R-pM) defines the natural way you organize your personal business. R-pM enables you to use your natural method of utilizing specific solutions in performance to produce specific business results. You will see improvement in the job you do today, and understand the potential to organize your company business for the breakthrough advantages of 21^st century business management. [more...]

Enterprises today are organized and managed using many structures

Throughout the 20^th century and continuing today, enterprises implemented organization, process, account, performance management, and other structures. The different entities used to describe each structure, produce business and information complexity. The fixed structures conflict with the changing business causing many other known 20^th century enterprise management problems. Many books have been written and additional management structures have been devised, but the problems remain.

Enterprises and management developers have been looking for one integrating structure

There have been many efforts to replace these structures with one simple and consistently-defined structure for business collaboration, reliable management information, use of common solutions, and other needs. Until now, no one has defined the one integrated structure that can be used to organize and manage any enterprise in any industry. Each new structure is laid over existing structures compounding the problems.

The one integrating structure exists; it is the business itself

There is one structure. It has been there all along! That structure is the business itself!

The enterprise business is defined as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The business consists of three components:

• Business results produced as economic outputs of value from the business
• Capital in the specific solutions invested in the business and implemented to produce results
• Performance in the utilization of each capital solution to produce each result

These components of the business are organized into the current and strategic business structures that replace all structures laid over the business for transparent management of strategic result value creation.

R-pM provides the only method to organize and manage the actual business

Today's unsolvable business problems are caused by conflicts between the actual business and structures laid over the business. Result-performance Management (R-pM) provides the knowledge and procedures to organize the business, as current and strategic business structures, for 21^st century management. All overlaid structures are replaced by the business structure to leave all unsolvable 20^th century management problems behind. [more...]

20^th century enterprise management lacks competitive differentiation and advantage for the 21^st century

Today's business enterprises manage the enterprise, and do not manage the business. Management structures laid over the business in today’s enterprises cannot create competitive differentiation and advantage from utilization of technology, the Internet, and intellectual capital. A new business structure is required to directly manage the business and enable competitive advantage in the 21^st century. The obstacle is conventional thinking that prevents a complete new definition of the business and continues to improve obsolete enterprise management structures laid over the business.

The 21^st century presents new requirements for competitive differentiation and advantage

In the 21^st century, business competition and collaboration can come from anywhere in the world. Competitive differentiation and advantage in the 21^st century requires that the business is simplified for fast and flexible change, is organized to utilize technology effectively and enable business communication and collaboration, and is managed to provide customer value and quality.

The business must be managed for significant new competitive differentiators and advantages for the 21^st century

21^st century competitive differentiation and advantage is gained by organizing and managing the business. Result-performance Management (R-pM) provides the knowledge and procedures required to manage the business. Information technology is employed effectively to organize the actual business for significant competitive advantage in the 21^st century. Capital invested in the business, performance to utilize capital, and output results produced by the business are managed directly to provide competitive differentiation in high value and quality customer results. The unorganized business burdened by overlaid structures will be a distinct competitive disadvantage as corporations organize their businesses in the decade of the 2010's. [more...]